Guaranteed loans are cheaper for students
Regarding the June 5 editorial, “Overhaul Lending for College Students”: In its discussion of federal student-loan programs, it is wrong that cost should be the only consideration. If it was, we’d all shop only at Wal-Mart.
Quality, reliability and loan costs do matter to the approximately 52 Iowa schools — and 6,000 schools nationwide — that rely on the guaranteed loan program. It says a lot that 500 schools tried and rejected direct loans.
Guaranteed loans were a centerpiece of President Lyndon Johnson’s Great Society. Since 1965, private, nonprofit and state-based loan providers have made it possible for millions of Americans to go to college.
No government report has ever stated unequivocally that direct loans cost the government less, because budget rules don’t capture all of their costs, the Congressional Budget Office (CBO), Government Accountability Office and others explain. It’s not enough that “common sense” says making loans directly costs less.
In fact, a former CBO director recently said that either program might be cheaper in any given year, depending on economic circumstances. “It’s not a matter of firm science,” he added.
What is certain is that guaranteed loans, and not direct loans, are cheaper for Iowa students. If our goal is to help young people face the harsh reality of paying for college, then the Register should support, not attack, the program that offers the better deal.
— Kevin Bruns, executive director, America’s Student Loan Providers, Washington, D.C.